Kingfisher Radler Attracts 28% GST and 12% Cess: AAR

The Karnataka Authority of Advance Ruling (AAR) has ruled that the Kingfisher Radler attracts 28% GST and 12% Cess.

The two-member bench of M.P. Ravi Prasad and T. Kiran Reddy has observed that the product "Kingfisher Radler" has different variants and all the variants merit classification as carbonated beverages of fruit drinks, all covered under tariff heading 2202 99 90.

The applicant is engaged in the manufacturing (brewing), bottling, marketing, and sale of alcoholic and non-alcoholic beverages. The applicant launched a non-alcoholic malt drink called "Kingfisher Radler" in 2018 and classified the product under tariff heading 2209 9100, as non-alcoholic beer.

The applicant submitted that the product "Kingfisher Radler" be manufactured and made available in three flavors, i.e., Ginger lime, Mint lime, and Lemon. The applicant submitted that the product is a non-alcoholic malt beverage, an agri-based product, containing barley malt and less sugar, manufactured out of natural ingredients such as barley, hops, etc., along with antioxidants and preservatives. Further, since the barley malt has a peculiar bitter taste, sugar and juice compounds in small quantities are added to make it suitable for the Indian palate.

The description of goods covered by the amendment notifications under Chapter Heading 2202 "Carbonated beverages of fruit drink or carbonated beverages with fruit juice" is in line with the classification adopted by the Food Safety and Standards Authority of India (FSSAI), which is the regulator for the food sector. The Food Safety and Standards (Food Products Standards and Food Additives) Regulations, 2011 set out the categorization of foods for the purpose of prescribing standards and permitted ingredients and additives. Regulation 2.3.30 of the FSS Regulations, deals with the FSSAI classification entry for 'Carbonated Fruit Beverages or Fruit Drinks'.

Any beverage or drink that is purported to be made from fruit juice and water or carbonated water and contains sugar, dextrose, invert sugar, or liquid glucose, either singly or in combination, is considered a carbonated fruit beverage or fruit drink. It may contain peel oil and fruit essences. It may also contain any other ingredients appropriate to the product.

The description of goods is aligned with FSSAI category 2.3.30, viz., 'Carbonated Fruit Beverages or Fruit Drinks' and 'Carbonated Beverages with Fruit juice.' The FSSAI category has been consistently referred to and applied by courts, including by the Supreme Court, for interpretation of the scope of tariff entries under chapter heading 2022.

The applicant has sought an advance ruling on the issue of whether the non-alcoholic malt drink "Kingfisher Radler" is covered under carbonated beverages of fruit drink or carbonated beverages with fruit juice.

The AAR noted that section 168 of the CGST Act 2017 empowers the competent authority with the power to issue instructions or directions as per the GST scheme of law. As per the GST Act and rules, FSSAI is not empowered under the GST scheme of law to issue directions or instructions for GST clarification.

"We hold that the FSSAI has been created to lay down science-based standards for articles of food and to regulate their manufacture, storage, distribution, sale, and import to ensure the availability of safe and wholesome food for human consumption and hence cannot be the factor for determination of the classification of goods under the GST scheme of law and procedure," the AAR said.

Applicant's Name: United Breweries Limited

Dated: 14.09.2022

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